Editor’s note: Bhaskar Chakravorti is senior associate dean of International Business and Finance and founding executive director of the Institute for Business in the Global Context at The Fletcher School at Tufts University.The views expressed are the author's own.

We now know who will be leading the two most important nations for the global economy – for the next four years in the United States’ case, and for a decade in China’s. By the time President Obama is ready to leave office, China will have passed the U.S. in GDP terms, at least according to a report by the OECD. But with GDP no longer Chinese leaders’ top concern, the country has its sights set on catching up with the U.S. in another area – innovation.

On a recent to visit to speak at the World Economic Forum's Summer Davos in Tianjin, I was struck by the sense of urgency among Chinese leaders to close the gap when it comes to innovation. It was clear to me that it is time for the U.S. to pay close attention, because urgency in China is generally followed by execution.

Unfortunately, America has worked itself up over the wrong issues as far as “competitiveness” is concerned: we bemoan the fact that China has taken our jobs (and 42 percent of Americans believe that China is already the world’s largest economy, a Pew survey suggested). But those worried about the country’s future would be better served focusing on U.S. competitiveness in innovation, something that has the potential to put this country’s growth back on track.

The problem is that there is a general (and misplaced) belief that China will always be a loser, that it can only imitate, not innovate. Critics argue that its society is too top-down and that American innovation will always be buoyed by Silicon Valley.

But the reality is that it is naïve to believe China cannot narrow the gap in innovation, and the second Obama administration would do well to consider that America could actually learn a thing or two from across the Pacific. And it could start by grappling with some widely held myths:

1. There is no innovation in China, only piracy and imitation.

Most innovation begins with imitation; America got its start by imitating inventions from the Old World. Meanwhile, many Chinese "imitations," such as Alibaba, Tencent or Sina Weibo, have moved far beyond being mere copies of their U.S. counterparts. Each is solving problems uniquely relevant to Chinese businesses and consumers, something that could create platforms for innovations that are propelled into global markets.

2. The Chinese approach to innovation is too top-down and state-led – real innovation only comes from the bottom-up.

The Chinese state is committed to bringing China to the ranks of the innovative nations by 2020. Silicon Valley entrepreneurs might shudder at this top-down approach. Yet consider, for example, where the American entrepreneur would be if the U.S. government had not funded the Defense Advanced Research Projects Agency that gave birth to the Internet. The state must play a role in investing in foundational innovations, such as the Internet and mobile technologies. Once these foundations are laid, then a competitive bottom-up ecosystem will encourage creative destruction. But sadly, U.S. government investment in such foundational innovations has been on a steady decline.

China's weaker intellectual property protection could, arguably, make it easier to foster a climate conducive to open innovation. Of course, a balance needs to be struck between open access to intellectual property and protecting it – with no protection, innovation will stall, because investors need returns on their investment. Unfortunately, in the U.S., intellectual property protections block innovation just as much as they promote it.

4. In a globalized economy, sustaining innovation requires investment in international markets; China's brand and soft power abroad is weak and dated.

Despite several unresolved issues such as territorial disputes and balance of trade, China's influence in the world's fast-growing regions, including Africa, Latin America and East Asia, is growing more rapidly than that of the United States. When Chinese innovations look for inputs or consumers and they turn to these markets, they are likely to have as many opportunities as well-known U.S. brands – perhaps even a better chance. Indeed, when it comes to ties with Africa and Latin America, China is often one step ahead of the U.S.

The danger with the Chinese approach is that if you don’t expose students to other disciplines and encourage critical thinking, they may lack the breadth to blossom into creative problem-solvers and risk takers. However, the U.S. system has some severe deficits of its own. A recent U.S. Department of Commerce report, for example, highlights a growing gap in science, technology, engineering and mathematics education. Notably, immigrants are the ones filling the education gap – half the start-ups in Silicon Valley were founded by immigrants.

Sure, the Chinese model of innovation needs plenty of work, but in many ways China is also learning from the U.S. and following in our early footsteps. As China moves up the curve and adds the uniqueness of its own experience and approach, it may create a new hybrid model that has lessons for other nations, including the United States.

Remember, it’s true that the global positioning system is a product of the U.S. Department of Defense. But the Chinese were the ones who gave us the compass in the first place.

soundoff(54 Responses)

Both the Chinese and Americans have – in their own way – a deep pride in their own cultural and economic achievements. Many believe that their civilisation, and their history, is greater than all others. Such an outlook also tends to accentuate a centric view of the world. It's time for them to learn from each other.

Anyone believing that the Chinese are only good for rote learning, imitating and beign boisterous should read Joseph Needham's 'Science and Civilisation in China'.

He went to Cambridge in 1918 to read medicine and trained as a biochemist. He went to China in 1942 and returned to Cambridge in 1948 to collaborate on his tour de force. In 1954, he completed his first volume. By 1985, he had published 15 volumes and expected to publish another 10 volumes.

It is little wonder then that this authotonous civilisation whose ability to sinicise its conquerors and outlive its invaders is legendary and mystifying and breeds both fear and fascination to the rest of the world.

If China can survive the perfidy of a decaying dynasty, its eventual subjugation by foreign powers, widespread famines, a devastating civil war and subsequent decades of isolation, imagine what it can achieve now that it is no longer shackled by these constraints.

Since when is civilization spelled with a s instead of a z? I think bseth and j.Von hettinger are the same authors. As for China, I don't think Americans are going for a semi communistic society. It could however pay more attention to its youth as a whole in terms of real education and ethnics , create meaningful jobs of production and more export than import. How about keeping the jobs in America, heck half of china and all the other countries are here anyway might as well utilize the manpower.

Sorry to let you know that it is impossible to keep jobs in America at present time.With the opening up of global markets by president Clinton,free trade was followed by free labor markets and the factories have to move to the low cost countries like China and India .The jobs will return to US only when the labor cost between developing countries and developed countries get closer.So wait until then.

The only way to create more jobs in US is to encourage big corporates who create more jobs in US with TAX incentive and punish those who move jobs out of US with higher tax rate .They get MUCH HIGHER profit margin when they out source to developing countries.Because they still sell almost the same price even though their cost are much lower by out sourcing.
Now it's time for us to review the centuries old socio-economic and political system and find out the one suitable for 21st century.With the breakthrough in science and technology human life become longer,computers internet,and factory automation making every country younger generation hard to find a job.This is the global phenomenon. Without solution for this world wide revolution this time not by the working class but by the middle class will be inevitable.

Chakravorti is one of the rare folks who correctly realized an important fact that the Chinese made at least 4 great inventions that benefited the entire world for the last hundreds or thousands of years. And yet, who paid a single penny to them while they cry loud and daily for Chinese 'stealing' their intellectual property? If you have a regular brain, you can easily calculate that if those inventions were rewarded with payments by the users, plus the interests (someone estimated it to be ~900 trillions!), much of the West would have been owned by Chinese. If your folks are really civilized, recognizing this fact is a must. One critical reason for this irony is that the Westerners are too proud of themselves to even try to learn from or understand China as they think they are the greatest in the world. Their view of the world is in par with the stunning difference between the lengths of Chinese history and the US history.

That's what the Brits were saying about the US during the turn of the 20th century. Then look what happened. Everything changes. Egypt was once the most powerful civilization on the planet and now look at it. The "things will always stay the same as they are now" mentality is so utterly, comically false that you'd have to be living under a rock to believe it.

Uh, am I the only one who clicked the links in this article and noticed that what the article says and what the things that are linked say are not the same? Like, where it says that china's GDP will be larger than the USA's in 4 years (when obama leaves office), and where it says that 42% of Americans were found to believe China was the top economic power, but the number is from a survey of the opinions of 14 Countries (not Americans)? Like, did this guy even read the links he's posting?

I am no expert, but to me, the litmus test of a prosperus culture is freedom, rule of Law and protection of intellectual property, and I beleive all are missing from china, because of this it will not be able to attract the global talent, that US does, this global talent is the major reason for innovation in USA.
I dont see a line of talented ppl standing out to enter China, if give anyone an option to migrate to china or USA , i am positive 99% will choose USA.

AK: I agree. However, I have been alarmed by a recent trend of the Chinese Government looking for ethnic Chinese abroad doing well in certain fields and offering them huge stipends to come (come back to the motherland) to China and help with the innovation process there. There will be a level of corruption of course, but the Chinese Government is doig their head-hunting well, and Chinese entrepreneurs are getting money from China that they could never dream to get elsewhere.

Wow, this article is a bunch of BS. Any such actions by China or similar actions by the US would be EXTREMLY detrimental to both countries. Right now China is using its economic strength more than the military. The naval buildup is not aimed at direct confrontation with US Navy but rather as a counter to US in proxy conflicts and negotiations.

There is only one way to deal with China: from a position of strenght. The US owes China Trillions of $$$ in Treasury Bills and Notes. Obama and his administration should demand that China revalue its grossly undervalued currency, to stop stealing our industrial secrets, and to abide by the rules of fair trade. If they do not, we should tell them to shove those trillions of TBills up their you know what. Simple !!!!!! In addition to putting China in its place,which is long overdue, that would also solve our national deficit problem. Obama, are you listening??

Have you got any economic common sense? Why would you buy when high and sell when low? Seriously think from a commercial perspective. If Americans were in Chinese shoes, from a free market perspective, would you revaluate your USD just so your asset bought at a high for cheap? China's got mouth to feed as well. Please be more considerate.

-Then, they moved it all to China (this all happened right under our noses in a relatively short span of time, yet very few are able to recognize the obvious, even to this day).

-All the while, they tax us into slavery, and sell us back OUR goods, that are now laced with lead and other toxic substances (think that was a coincidence/accident or the fault of the Chinese slaves on the other end?). Yes, this is just another way the Jews have poisoned us (and our children).

-In the meantime, they stole OUR technologies (all they do in China is reproduce everything we invent, discover, and create), our military secrets, and fund the very RED army they will eventually use to strike the final blow in our coffin justified by our false "debt" to them. Do you "think" they are arming them for "nothing", and convincing the Chinese that we "owe" them for "no reason"? Will you still "believe" that as the RED Chinese army is marching down your street?

And on the back end of all of this, they have most of the American sheeple convinced that we somehow "owe" the Chinese, as they have engaged in a relentless propaganda campaign in China as well to convince them of the same ridiculous lie.

Wow.. What a scam these Jews have pulled off. Robbing us blind, destroying our economy, stripping our entire manufacturing industry down to the bones, and convincing the Chinese that we are in "debt" to them (of course the Jews have complete control over China, so all that "debt" they created on this end, goes right to them on the other...screwing us both coming and going)

Unless of course you "think" this was all a "coincidence" and "believe" that the Chinese somehow out smarted us, swooped in and stole everything on their own, and beat us at our own game...To point out the obvious: these are OUR inventions and OUR technologies, nothing originally "Chinese" about ANY of "their" products or weaponry.. (what would they threaten us with if not armed with OUR military "secrets".. bows and arrows?).

Again, they are using OUR technologies against us... to include, in the not too distant future, the military technologies that were stolen from us. "Ironic" isn't it? Or so it would seem, to a person who is unaware of the Jewish agenda and their usual modus operandi.

That is incredibly offensive and racist even for an overseas born Chinese. Whats stopping me from saying most stuff in US came from Germany? I dont hear any German mates chuck a hissy over how their country got robbed of their technologies.

Nations normally due what they perceive to be in their own best interests, including the U.S. We need to try to understand more and demonize less. There does not seem to be a magic formula that solves all disagreements. Brinkmanship is a very nervewracking and expensive process.

Totally logical. Growth of mankind as whole. Whoever has the resources should endeavour to do the most. And in this day and age money=resource :) Petty squabbles and technology hoarding is just process inefficiency in the long run.

The comments on intellectual property rights are really glossed over, at least from the viewpoint of the US working with China. Why would you want invest in a country that is more interested in stealing your technology than actually working with you long term? There are many foreign companies that have learned this the hard way and lost millions.

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